Sweepstake and Contest Laws

Laws and Rules for Sweepstakes in Alabama

First, it helps to understand the difference between a sweepstakes, contest and lottery. In a sweepstakes, winners are chosen randomly from all participants. In a contest, the winners' entries are usually judged and are based on a skill or criteria. In a lottery, winners are chosen at random, but in order to enter, the participant must pay. A payment is called a consideration. Only states can hold lotteries, so all private lotteries are illegal.

To avoid being classified as an illegal lottery in any state, your promotion can only have 2 of these 3 elements: prize, chance and consideration. Keep in mind, consideration can mean anything of value, including a fee or even a significant effort (i.e., time spent shooting/submitting a photo, etc.)

Here are possible combinations:

• Prize + consideration + chance = illegal lottery or gambling
• Prize + consideration = legal contest (in most jurisdictions)
• Prize + chance = legal sweepstakes

All sweepstakes in the United States must meet the following regulations:

1. No purchase necessary. You can enter the sweepstakes without buying a product or service.
2. Winners are required to pay taxes on prizes they win.

Sweepstakes are regulated nationally and by state by the following organizations:

• Federal Trade Commission (FTC)
• Federal Communications Commission (FCC)
• United States Postal Service (USPS)
• United States Department of Justice (DOJ)

State Specific Sweepstakes & Contest Laws

Besides federal considerations, every state has its own specifics laws regarding sweepstakes and contests.

Alabama (AL)

You can't imply or say, "You won!" a contest or sweepstakes as a tactic to sell something by mail.

Contests: If the contest includes an element of consideration, the sponsor must award the contest prize based on skill and not chance.

Sweepstakes: are allowed as long as participants do not pay consideration. Alabama does not consider any of the following considerations:

• Paying postage to request or return an entry form 
• A participant advertising the promotion to friends or relatives
• A participant going to a retail store
• A sponsor benefiting from increased sales as a result of the promotion

Prize Promotion Laws - Alabama's Deceptive Sweepstakes Solicitation Law

• Sweepstakes that are advertised in mail/direct mail materials in conjunction with an offer to purchase a product or service cannot include any misleading statements that the recipient has won a prize. Any statement about winning a prize must include language clarifying what actions the person must make to receive the prize. 

Legal Review Criteria: Material Element Test when assessing whether or not chance determines the outcome of a promotion.

Note: the information above is for informational purposes only and should not be construed as legal advice. Sweepstakes and Contest promotional laws change and the above may not reflect the must current laws.